Approximately 1 in 4 homeless adults have both a Serious mental illness and a history of substance abuse. Programs focusing on either mental health or substance abuse treatment are often unwilling or unable to deal with this dually diagnosed subgroup of the homeless. There has been little empirical investigation of the few model programs that have emerged in recent years to treat this population. The proposed research will compare the effectiveness of a residential and a nonresidential hybrid treatment program for the dually diagnosed. Both programs will have available a maintenance program and placement in sober living houses. Among mentally ill homeless persons who are initially engaged by a socialization center that currently provides a range of services, those with a co-occurring substance dependence diagnosis will be randomly assigned to one of three conditions: treatment a in new nonresidential hybrid program designed for the dually diagnosed, treatment through a new service linkage with an existing residential treatment program, or no intervention beyond the existing socialization program. In addition, a non-experimental comparison group will be studied, consisting of dually diagnosed homeless individuals who enter the residential treatment program through the usual referral process. We will address the following research questions: 1. Do the interventions improve substance abuse and mental illness outcomes? That is, compared to no intervention, do the residential and nonresidential interventions reduce the quantity and frequency of alcohol and other drug use, decrease symptoms of dependence, ameliorate symptoms of mental illness, and improve levels of functioning? 2. Do the interventions enhance social and economic outcomes? That is, compared to no intervention, do the residential and nonresidential interventions decrease the incidence of hospitalizations and arrests, increase the likelihood and duration of residential living, improve money management, increase the amount of legitimate earnings, improve access to entitlement benefits, and increase vocational activities? 3. How do the residential and nonresidential interventions differ with respect to program attrition, short- and long-term outcomes (in 1 and 2 above), and costs?